The parliamentary standing committee on labour on Wednesday asked the government to take decision expeditiously on enhancing the monthly minimum pension under the employees’ pension scheme, 1995 run by employees’ provident fund organisation (EPFO).
This new move will help those bank account holder who do not use net banking yet want to invest in APY for their retirement needs.
The parliamentary standing committee on labour on Wednesday asked the government to take decision expeditiously on enhancing the monthly minimum pension under the employees’ pension scheme, 1995 run by employees’ provident fund organisation (EPFO). “EPFO’s central board of trustees (CBT) had in August, 2019 recommended raising the monthly minimum pension to Rs 2,000-3,000. They had sent their recommendation to the government. But, even after one year, no decision has been taken by the government so far. We have asked them to take the decision expeditiously,” committee chairman Bhartruhari Mahtab said.
CBT is a tripartite body with representation from government, employer and employees. It is the highest decision-making body of the EPFO. “The government could have taken the decision in 2019 itself,” Mahtab said. A high-powered monitoring committee, appointed by the labour ministry, had also recommended raising the minimum monthly pension amount in December, 2018.
Under the EPS, 1995, a minimum pension of Rs 1,000 is given to pensioners. Employees are automatically enrolled into the EPS scheme if they are members of the EPFO. The minimum monthly pension was last raised in September, 2014. The Employees’ Pension Scheme, 1995 came into effect on November 16, 1995 and with its introduction, the erstwhile Employees’ Family Pension Scheme, 1971 ceased to operate and all the assets and liabilities of the old scheme were transferred and merged with the EPS, 1995. EPS aims at providing economic sustenance during old age and survivorship coverage to members and their families.
The central government contributes 1.16% of EPF subscribers’ monthly salary towards his EPS account, but the salary base for computation is capped at `15,000/month, so that the monthly contribution doesn’t exceed Rs 174/month. EPS is also funded by employer’s share of 8.33% of basic salary-plus-DA, subject to a monthly cap of Rs 1,250. EPS is compulsory to all members contributing to EPF.
If the minimum pension is raised, the government’s contribution will go up, putting pressure on the exchequer. Currently, the government is believed to be sanctioning about `6,000 crore annually to the EPS pool. It sanctioned Rs 5,757 crore to the EPS in 2017-18 and `4,285 crore in 2016-17, according to latest official data available.
The standing committee on labour also asked the EPFO and the labour ministry official present in the meeting to furnish the rationale for continuing with the investment in the equity market even when the market was falling in March hit by the pandemic.